1) You can edit taglist entries by opening the taglist view from View - Views/Lists - Tag List and click with secondary (right) mouse button in the tag list. A small popup menu is shown with only one item "Modify Tags". Click on it and you will see a dialog for editing the tags.
If you want to edit lots of tags, create a backup of taglist.txt in UltraEdit installation directory or taglist.uet in the directory of uedit32.ini and then open it with UltraEdit. I think, it is not necessary to explain the format of this file. It's simple and you should see, how it is formated.
The only thing you must know, that no number can be left out. The numbers must increase by 1 from one tag to the next. " :UEDS:
" (note the space before the first :) separates the description from the string, which is inserted when clicked on a tag in the tag list view.
A multiline tag can be created by using ^p in the tag line for CR/LF.
For a tab simply insert a real tab (hex 09) and not spaces or ^t.
2) Yes, you have to close UE and start again if not editing it with the dialog, because UltraEdit reads the content of the taglist file only once at startup.
See also following topic Cannot find how to add to tag list in help
There are also some tag lists files at Downloads - Extras - Tag Lists here on this site which could be helpful for you.